1. This is a problem that has TWO questions. Therefore, please choose TWO answers (one choice for each question) to get full credit for this questions, otherwise you will only get partial points.

   Assume 6-month zero rate is 4.045%. Also use the following table to answer the questions below.

   The following table gives the prices of bonds:

   Face value	Time to maturity	Coupon / year	bond price
   100	1 year	0	97
   100	1.5 year	15	98.5

   *Half of the stated coupon is paid every six months

   ** all rates are continuously compounded

   #1. What is the zero rate for 1 year?

   #2. What is the zero rate for 1.5 year?

   		#1) 3.046%
   		#1) 4.545%
   		#1) 3.455%
   		#1) 5.206%
   		#2) 12.245%
   		#2) 13.522%
   		#2) 16.544%
   		#2) 15.377%